New to getting financial advice? Impartial resources for New Zealanders

On my quest to find impartial advice about finding a financial adviser I have come across this fantastic website written by the FMA (Financial Markets Authority).  The government department who controls the financial markets.

Lets start with the basics:Important

Have you ever wanted to know what to say when you meet with an adviser?

What is Kiwisaver:KiwiSaver logo_RGB

And best of all, getting something for nothing!

The information above is provided by the government in a bid to build confidence in the advice area, after all, they are the monitors of it.  Please let me know if this has helped you and what it helped with.

Note of caution: this site is really for New Zealanders only

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What does the TPP mean to you and me?

The Trans Pacific Partnership agreement is finally getting closer to a sign-off by all countries involved.  Most of the angst around the deal relates to the secrecy, due to the impact of decisions made by the few affecting so many.

Reading about what these sorts of deals with other countries have done, and the lawsuits that ensued as US lawyers took hammers to unsuspecting Chileans in particular raises concerns, so we need to know what it is and what it means.

One of the best articles I have seen so far, that has been reasonably easy to read is the one at this link, what-the-landmark-trans-pacific-trade-deal-really-means

Another thing to understand about this trade deal is that it is enmeshed in the fraught politics of China’s economic rise. To gain political backing in the US, the Obama administration has portrayed the deal as a way to box China into high trade standards and reward US allies in the region. But the end-goal for trade advocates is to get China into the TPP, not box it out. And with China developing its own style of trade pact within Asia, the Regional Comprehensive Economic Partnership, there’s hope that the competing blocs could push each other to improve standards in areas like labor rights and state-owned company reform.

So, one of the benefits, if it happens is for the rest of the world to see an improvement in labour standards. For China we believe this will mean, and has already started to mean, an increase in labour costs (improvements in welfare of workers), pushing some companies to find other countries that are cheaper, such as Vietnam and Bangladesh (less interested in the welfare of workers).

The article also points out that the net benefit to New Zealand, even by 2025 is only 0.9% of an increase in our Gross Domestic Product (GDP).  GDP is one of the primary indicators used to gauge the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific time period; you can think of it as the size of the economy.  The figures around the benefits to each country are in dispute though just due to the secrecy and the lack of intricate details with which to base a certain answer on.

Here are what others are saying are saying about the agreement:

What Is the Trans-Pacific Partnership Agreement (TPP)?

The Trans-Pacific Partnership (TPP) is a secretive, multinational trade agreement that threatens to extend restrictive intellectual property (IP) laws across the globe and rewrite international rules on its enforcement. The main problems are two-fold:

(1) Intellectual Property Chapter: Leaked draft texts of the agreement show that the IP chapter would have extensive negative ramifications for users’ freedom of expression, right to privacy and due process, and hinder peoples’ abilities to innovate.

(2) Lack of Transparency: The entire process has shut out multi-stakeholder participation and is shrouded in secrecy.

The twelve nations currently negotiating the TPP are the U.S., Japan, Australia, Peru, Malaysia, Vietnam, New Zealand, Chile, Singapore, Canada, Mexico, and Brunei Darussalam. The TPP contains a chapter on intellectual property covering copyright, trademarks, and patents. Since the draft text of the agreement has never been officially released to the public, we know from leaked documents…

and from the BBC:

TPP: What is it and why does it matter?

The Trans-Pacific Partnership (TPP) is one of the most ambitious free trade agreements ever attempted.

Its supporters have billed it as a pathway to unlock future growth of the countries involved in the pact.

The critics have been equally vociferous, not least because of the secrecy surrounding the negotiations of the agreement.

But despite the criticism, the countries involved have been pushing for a deal to be reached soon and they are confident that even more economies will want to join the pact in the coming years.

So what exactly is the TPP?

It is a proposed free trade deal currently being negotiated between 11 countries.

Whatever happens, we are going to be stuck with it for a long time, and as the saying goes, “only time will tell”. The process now is for the agreement to be taken back to their respective countries for the governments to decide if they agree, as there will be some law changes necessary for all countries.  If they do, it will be signed and sealed, done.

If you would like to know more, here are some other links to follow:

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3 Tips to Better Budgeting (ignorance in this case is not bliss)

I don’t know anyone who enjoys writing a budget for themselves, but doing so can bring financial confidence and have long-lasting positive impact.  I know that when I start talking about personal finances to most people they either switch off, change the subject or walk away!  But, even if this is you, don’t click away, give it a go, you may not be asleep by the end of it!

Tip 1: Tell the truth by knowing the truth
There is no use wriggling when in sinking sand, you only sink faster!!
man in sinking sand

I believe that it is better to tell the truth than a lie. I believe it is better to be free than to be a slave. And I believe it is better to know than to be ignorant.”
H. L. Mencken

Once you know where you are starting from, it is easier to know where you are going.  If you earn $50,000 a year, don’t write in your budget that you earn $100,000 a year, even if that is your goal.  If you spend $400 per week on groceries, don’t put in your budget that you spend $250 per week, even if that is what you would “like” to spend, it is not the truth.

Once you have the actual truth in front of you, including all your extras, you can make real choices about real situations.  Doing this is not only freeing, it is also helpful when out shopping to not buy items that you don’t need, or book trips you can’t afford.  See it as an opportunity to get creative, figure out a new income stream, economise on boring spending such as power and other utilities, make sure you have the best deal from your bank (yes you can and should negotiate with them).

Tip 2: Use 3 months’ of Actuals (i.e. direct from your bank statement)

hands-typing-2Bank statements are now able to be downloaded easily enough and the information can be sorted in different ways to suit what you are trying to find out.

You can also use a budgeting website such as to organise your income and spending.

Starting from your actual spending will help you identify what is going right, as well as what is going wrong, and more importantly give you an opportunity to change what is necessary to move in the right direction.

This whole process is about improvement and creating opportunity for success, so if you are not feeling this way by now, then the next tip is for you.

Tip 3: Don’t beat yourself up, practice makes perfect, or close enough

We all make mistakes, we are human, it happens.

We can also be caught out by circumstances beyond our control.  If this is you, do not fret, the best path to making it back to your goals is to readdress the actuals, adjust for the interruption and figure out a way forward.  If you are having trouble with this, at least you will know your actual situation when seeking help, which will save you lots of money if you are paying by the hour to sort it out.road-nature-lines-country2

Don’t look at unexpected detours as failures, just think of them as opportunities to practice finding your way back to the road you want to be on.

As financial advisers we are here to help, we are interested in YOUR success, because it becomes our success.  If you need help, please ask, if we can’t help you we will try and find you someone who can.

It is your money, in your hands, whether or not it is sorted, is up to you.

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Retirement Villages – we need a real conversation

Couple playing golfI have been thrilled to find out recently that a government department is running unbiased seminars about retirement villages, in particular the type of choice that it is.

Due to the nature of the majority of villages, the type of decision to move into a village is usually NOT similar to buying a freehold home.  It is more a decision of necessity, made grudgingly, or one of wanting to have more community in retirement and have the benefits of living in a village, such as security, activities, transport and new friends.

If you would like to attend one of these seminars, they are still running around the country, these dates were taken directly from the website which I have mentioned below:

Event registration

Places are limited, so registration is essential.

For further information or to register your attendance, select a location below or call 0800 268 269.

Note: we are planning additional seminars in other towns now. Email us your contact details and we will let you know what new venues and dates we arrange as soon as we have done so.

Auckland (North Shore), 25 August

Tauranga, 3 September

Christchurch, 30 September

Paraparaumu, 15 October

Hastings, 20 October

Rotorua, 21 October

New Plymouth, 10 November

Palmerston North, 11 November

Auckland (Howick), 17 November

If you would like more information about what is being discussed and where you can find out more if you missed out in your area, go to

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The Great Fall of China – what really happened?

The media has had a ball with this one…


Firstly, let’s separate the “share market” from the “economy”. The value of a share market is simply the price of the companies listed there as determined by their investors – the buyers and sellers of those shares. Share market performance is not linked to the GDP or economic growth of a country, it does not impact unemployment rates or any other measure of the economy. A 10% drop in a share market does not mean a 10% deterioration of an economy. The economy in China continues to grow at a rate of around 7% per annum – a growth rate that developed economies are envious of.

Secondly, there is no such thing as the “Chinese share market”. Any reference by media to the Chinese share market is a clear sign you are reading a poorly researched article. China has three share markets – Shanghai Stock Exchange, Hong Kong Stock Exchange and Shenzhen Stock Exchange – and they are all very different animals. Hong Kong is a far better regulated market than Shanghai, with a level of governance (listing requirements, continuous disclosure etc.) that is on par, if not superior to, western exchanges. Hong Kong is a market dominated by offshore and institutional investors (again, similar to western exchanges). Shanghai is dominated (80-90%) by retail investors. As a consequence, Shanghai is a far more volatile exchange. It is these retail investors (increasingly using gearing) that saw the Shanghai Exchange rally up to 150% over the last year (by comparison Hong Kong rallied up to 20%).


Because off-shore investors focus on Hong Kong, they were not materially impacted by the drop in the Shanghai market.

While there is no dispute that shares on the Shanghai market fell steeply for a few weeks, it is important to put this into context. The Shanghai market is measured by the Shanghai Composite Index. A year ago, this index was at around 2,200 and increased during late 2014 and early 2015 to around 5,200 in June (up about 150%). It then fell to around 3,500 before recovering to around 4,200. So, long term investors who bought stocks when the market was at 2,200 have almost doubled their money – so what’s the problem? Even with the Shanghai index dropping by 20% from its peak, why were there claims of investors losing EVERYTHING?

There were three main reasons investors lost money here: gearing, having a short time approach and a lack of diversification.

Many Chinese investors took a highly aggressive approach to investing and borrowed up to 90% of the funds they invested – this is referred to as gearing (or margin lending). This means that shares only needed to drop by 10% before investors are forced to sell up and repay the 90% loan. By losing the first 10%, they lose everything. We do not subscribe to gearing in our portfolios.

Short term view
The Shanghai market is very young. It was only opened in 1990 and there is not a long history of investing. Local Chinese investors were making short term plays into long term investments. If they were prepared to take the knocks and hold in for a few years, they would recover their losses. They did not hold, but instead sold at the worst possible time. People who invested at the peak of the market had watched it double in six months and perhaps imagined the performance would continue for a little while. History tells us that equity markets out-perform every other asset class over the long term – but not always over very short periods. We only invest in shares if we have an appropriate investment time horizon to ride out any volatility.

Lack of diversification
The only way you can lose everything in a share market crash is to invest everything in that one market. I have sympathy for the Chinese investors who may not have had access to offshore investments and felt that investing everything they had in their local market was the best thing to do. This is totally contrary to our western mantra of don’t put all your eggs in one basket. We are fortunate to have access to a wide range of off shore investments, and try to maintain a maximum exposure to any one asset of 5% of the total portfolio. We also limit exposure to shares to a level that is appropriate for the amount of risk each client can accommodate.

What is the impact for NZ Investors?
NZ Investors will see very little on their portfolios. Our investors only have a small exposure to Chinese shares, and this is generally through Global Share funds that have a portion of their fund invested in China, or through the Premium China Fund which invests mainly in Hong Kong and Taiwan. These funds have performed well in the four weeks since the media started going mad on China. Broader International or Global share funds have returned 2.44% in the last 28 days, and the Premium China Fund is down -1.77% over the same period. (Calculated in NZ dollar terms net of Fund Manager fees, gross of tax).

So, as usual, the truth is far less exciting than the media would have you believe.

Did you ever read a headline that said “Share market investors enjoy acceptable returns over the long term”? No – that just wouldn’t sell papers.

If you would like more information about how your specific portfolio is performing, please contact your adviser.

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Investing in Responsible Managed Funds – Update from Harbour

This is NOT advice!!  This is just an update for those people who currently invest with Harbour Asset Management.  It is exciting to see local managers adhering to International Guidelines for the benefit of us all.

Harbour’s Responsible investing – a world class initiative

Institutional investors act as important fiduciaries in capital markets. Harbour Asset Management is strongly committed to responsible investing as we manage funds for clients.

Harbour has been a signatory since 2010 of The United Nations Principles for Responsible Investment initiative (UN PRI), and recently achieved an A+ rating. To place this into context, less than 20% of respondents world-wide achieved the top rating.

The UN PRI was founded in 2005, and exists to promote sustainable and responsible investing.

We are proud of our current 2014-2015 assessment period. The A+ rating was achieved for our over-arching investment approach. The rating reflects the efforts of the Harbour team to incorporate Environmental, Social, and Governance (ESG) principles into the investment process.

Harbour applies its ESG methodology across all of the funds that we manage. We are confident that by adhering to these principles, we are among best in class when it comes to Responsible Investing (RI). We believe that strong corporate behaviour leads to better investor outcomes over the long term.

Founded in 2005, The Principles for Responsible Investment initiative is a global organisation designed to promote and implement 6 principles. Sanctioned by the UN, the principles encourage the incorporation of sustainable and responsible investing ideals into the fabric of the investment process of asset owners and managers. With over 1260 signatories worldwide, comprising an estimated $45 trillion of assets under management, the UN PRI exerts a considerable amount of influence with this initiative.

While we are satisfied with the results we have achieved in both the 2014 and 2015 assessments, there is still more work to be done.  In particular, the measurement of investment outcomes attributed to ESG factors can be improved, and further analysis of remuneration incentives around ESG or RI performance indicators could be developed.

Harbour is committed to strong environmental, social, and governance standards. We will continue to look to champion their cause in the market, work with other institutional investors and improve our own internal processes. Our 2015 UN PRI assessment result reinforces our reputation of strong RI practices, and recognises Harbours place in the top tier of global asset owners and investment managers for responsible investing.

Our transparency report is publically available to download from the UN PRI website, or from Harbour. Please get in contact with Harbour if you would like a full copy of our 2014-15 report, or have any questions regarding the PRI assessment process, the UN PRI, or Harbours ESG process. For further information on the United Nations Principles for Responsible Investment Initiative (UN PRI), see:

Kind regards

Andrew Bascand and Christian Hawkesby

Managing Director and Director

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Greece – How does it impact you?

Greece – How does it impact you?

The situation is changing daily in Greece, so by the time you read this, my comments may well be superseded.

Greeks will need to accept an even-tougher austerity plan than the one they rejected overwhelmingly in the recent referendum and even then, there is a chance that we will see Greece exit over the next year or two. Such an event is unlikely to be a shock to the market. Fundamentally, Greece will always struggle to service, let alone repay, their debt while their economy and population (e.g. tax base) continues to shrink.

The roots of Greece’s crisis are simple. Before Greece joined the Eurozone, investors treated it as a middle-income country with poor governance — which is to say, a credit risk. After Greece joined the Eurozone, investors thought that Greece was no longer a credit risk — they figured, if push came to shove, other Eurozone members like Germany would bail Greece out. They were wrong. The reality is Greece has a growing debt and a shrinking economy, and the rich cousins are not prepared to keep propping them up.

Why is the economy shrinking, and why is this a problem?

A countries’ tax revenue is largely based on the collective productivity of its population (GDP). Unemployment in Greece is now 26% – up from 10% in 2010. This is not necessarily the cause of the GDP fall (although it contributes) but it does demonstrate the radical deterioration of the economy. GDP dropped from €350 Billion in 2010 to €230 Billion now. Meanwhile the debt sits at €330 Billion – about 180% of GDP. To put this in perspective, UK debt is 80% of GDP and NZ debt is 35.9% of GDP. The interest alone on Greek debt is around four times their current annual surplus which means they will probably never make headway.

Greece is now expected to sell €50 Billion of state owned assets in 2015, which will allow for debt repayment, but worsen their income earning ability.

Not only is productivity falling, their population is also fleeing, and has been for years. Before the crisis, Greece’s population was growing. Since the crisis, it’s shrinking. The upwardly mobile population of Greece feels there is little hope in staying and are leaving while they can. And it’s a good bet that the people leaving Greece are some of the most economically productive. After all, it’s a lot easier to emigrate if you have an engineering PhD and resources than if you lack in-demand skills and the money necessary to travel. But as rational as Greek emigration is, it means it will be that much harder for the Greek economy to recover.


So who lent them the money, and who will suffer the loss?

Firstly, your portfolio has no exposure to Greek debt, and as far as we have been able to determine, no exposure to Greek companies. Germany is holding about 20% of the debt, and a portion of this is with German banks. France and Italy are next in line ahead of Spain. The US and UK have been very quiet on the matter as they have no Sovereign money on the line.


How will you be effected?

Markets hate uncertainty and irrational fear takes over, however Greece only represents 0.38% of the world’s economy, so from a financial point of view, the Greek economy is insignificant. Whatever the outcome of the current negotiations, the impact on NZ investors will be modest volatility on world share markets and potential buying opportunities, rather than any risk of long term capital loss.

The real tragedy here is for the Greek people who are feeling financial pain and stress that most of us will never face. Bank accounts are frozen and many of the fortunate people who do have jobs, are not being paid. This human tragedy will not be resolved overnight and will likely dominate headlines for many months.



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